Comcast and Microsoft this week announced an agreement that extends their existing relationship and gives Comcast the ability to make available Microsoft TV Foundation Edition 1.7 software to up to five million customers, with the option to expand the roll-out at a later date.

Given that Comcast has only 21 million customers, this single contract has effectively handed over a huge advantage to Microsoft in the battle to define the shape of the future set-top. "We're very impressed with the Microsoft software platform and its ability to enhance and promote video on demand, as well as its capability to launch other interactive services," said Steve Burke, president of Comcast Cable. "We're excited about working closely with Microsoft to jointly define the digital TV experiences of the future and to continue bringing innovative services to our cable customers."

Although Comcast now talks about using Microsoft TV Foundation to provide a competitive advantage, all that other US cable companies will do is follow suit and buy into the product set. Cablevision has already begun its own trials of the software.

It must be chilling for companies like Scientific Atlanta and Motorola, who are used to working with Comcast to define the function it thinks it needs, and hard wiring it into the set-top. Now it is likely that at the top end they will have to work hand in hand with Microsoft or risk missing out on plum contracts.

Microsoft may not be charging much right now, but as it expands the options available on the set-top it will begin to exert a control over the design of things like Digital Video Recorders, which are increasingly being bundled into set-top boxes.

That, along with the Online Programming Guide that it offers, means that Microsoft will be eating into the lunch of companies like TiVo and Gemstar. If Microsoft gets up a big enough head of steam it could also force its software onto the retail DVRs that have just come onto the market in the US from consumer electronics companies.

Microsoft says that Foundation Edition is designed to work across a range of set-top boxes, from those offered by cable companies to more advanced set-tops that enable new services, including dual-tuner DVR, VOD, HDTV and games. The software already has support for dual-tuner DVRs and has HDTV capabilities and has been used on Motorola's new DCT 6412 set-top.

Interactive guide

Last July, Comcast and AOL Time Warner both agreed to try out the Microsoft TV interactive program guide in the US. Previously Microsoft had only made inroads with this software outside of the US in Mexico.

Microsoft Foundation Edition offers support services to existing VoD platforms, such as two-way interactivity for interactive TV, advertising targeting, better awareness of what's available on a VoD system through the creation of On-Demand Storefronts, improved back-office integration, and new applications including games and viewer self provisioning.

Microsoft re-launched it at 2003's National Cable & Telecommunications Association's when it also announced partnerships with video on demand server specialists, Seachange and Concurrent. It also announced that Cablevision is to deploy the system in a VoD implementation in Mexico City, expected to roll out to 450,000 homes within a year.

Comcast initially used the Microsoft Online Programming Guide from last fall in the Seattle area based on Motorola DCT2000 set-top boxes, while AOL's Time Warner Cable has run a trial of Microsoft TV IPG in Beaumont on the same Motorola DCT2000 set-tops.

In January, Microsoft bought out enhancements in version 1.5, including fully integrated support for high-definition television and digital video recording. And in May this year, at the most recent NCTA, Microsoft rolled out version 1.7 which has support for Motorola's new DCT6412 set-top which has two tuners and DVR function and which is Motorola's first DVR market entry.

The new edition also offers a new video window displaying back-ground programming while consumers are viewing static or recorded screens, and claims to have TiVo-like "smart" recording services, so that a favourite TV series can be simply recorded whenever it is on.

Microsoft also added a "smart" progress bar onscreen to show how far into a recording you are when viewing. The new software also supports a rolling 90 minutes long buffer, so that you can decide to record something long after it has started.

What's the betting that TiVo and Gemstar look very long and hard at the Microsoft offering and considering legal action of patent issues before long. Both companies have been litigious in defense of their patents in the past and Microsoft appears to be not treading, but stamping on their toes.

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